The Best Bitcoin Trading Strategy – 5 Easy Steps to Profit
If you wish to start trading the Bitcoin you have to create a Bitcoin wallet. While Bitcoin traders are growing by the day, everyone is on the lookout for the best trading strategy and ways to amass more profits. Find out more here for the best trading strategy. The truth is that Bitcoin prices are speculative and determined by market sentiment; so, chances of facing big losses are quite high at any time. It is better to start practicing through a demo trade account before you risk your hard-earned money in live trades. Here are some trading strategies that you can choose from:
- HODLing: This refers to holding onto your Bitcoins for the long term and is a convenient and secure way for newcomers to trade. It focuses on maintaining long positions on Bitcoins, waiting for the prices to increase with time. But Bitcoin is known for being notoriously volatile and this indicates that this particular strategy may not always pay off. So, you should choose this strategy only when you have a proper risk management plan.
- Hedging: Those who have Bitcoins can consider hedging their risks when they are sure of a short-term fall in market prices. So, in hedging, Bitcoin holders open trades to eliminate the risks to existing positions. In other words, you can open a position for short-selling the Bitcoin where you sell to make the prices go down. If the prices do fall, you can buy the coins again at the lower price and make profits from the difference. So, losses incurred to the original BTC amount are offset by profits made through the short BTC trade. It is advisable to practice this strategy first using a demo-account that is free from risks.
- Trend trading: Here, you hold a trading position as long as the trend continues. A trend can be high or low making this strategy suited for different time periods. So, you hold onto a trend for an expected amount of time that could run into months. But, to be successful in this strategy, you must stay informed with the latest cryptocurrency news and events that can impact the Bitcoin price. Trend trading will make use of technical data for predicting the way the market will move.
- Breakout strategy: This involves entering the crypto market as fast as you can on a trend and wait for the prices to break out. The idea behind this is that when the market breaks through a resistance or support level, it will trigger high volatility. As a trader, you will try to enter the market during such points to ride the trend from beginning to end.
- Day trading: This is when you open and close trade positions within a single day. Since Bitcoin is known for its high volatility you will encounter many trading opportunities within a single trade day. You can use technical indicators to understand when the prices will go up. However, to be successful with this strategy, you must diversify your trades and invest in other assets besides the Bitcoin. You should choose a crypto exchange that charges low fees; else, you will lose out hugely if you have to open multiple positions every day. You must follow the latest crypto news, use technical indicators, stop-loss orders, and plan your trading times.